Hot Fun in the Summertime: Good Data Reported in Japan and Europe

July 1, 2013

The Bank of Japan’s quarterly corporate survey revealed a 12-point advance to +4 in the diffusion index for large manufacturers, a 6-point increase to +12 in the index for large non-manufacturers, and sharp upwardly revised investment plans for the present fiscal year.

France, Italy, Spain, the Netherlands, Ireland, Austria, and Greece reported higher purchasing manager indices in manufacturing in June from May. Euroland as a whole posted a 48.8 score, which constitutes a 16-month high in manufacturing activity. Demand and production hardly fell in June, and both input and output prices were declining.

The British manufacturing PMI rose a full point to a 25-month high of 52.5 and posted an average 2Q score of 51.4, the most in two years.

Australia’s PMI rebounded to 49.6 from 43.8 in May.

Stocks in the Pacific Rim were mixed, rising 1.3% in Japan, 1.8% in Hong Kong, 0.6% in China and 0.9% in India but falling 1.9% in Australia, 0.5% in New Zealand, 0.4% in South Korea, and 0.3% in Taiwan and Singapore. In Europe, equities have risen 0.8% in Britain, 0.7% in Italy and Spain, 0.6% in France and 0.3% in Germany.

Sovereign debt yields are up six basis points in Japan, four bps in Britain and a single basis point in Germany.

The dollar is narrowly mixed with gains of 0.4% against the yen and 0.1% versus the Swiss franc but declines of 0.4% relative to the Aussie dollar, 0.3% against the kiwi and euro, and 0.1% versus sterling. The loonie and yuan are unchanged.

Commodity prices strengthened 1.5% in the case of gold to $1241.60 per ounce and 0.5% for WTI oil to $97.07.

Unemployment in the euro area ticked up to 12.1% in May after printing at 12.0% in the three prior months. The jobless rate in May 2012 was 11.3%.

Ezone CPI inflation was at 1.6% in June after 1.4% in May and 1.2% in April. Core inflation has been more stable, printing unchanged at 1.2% from May. Total and core inflation in the year to June 2012 had been at 2.4% and 1.6%.

Not all today’s June PMI reports brought cheer.

The HSBC Chinese PMI index of 48.2 and government-authorized Chinese PMI of 50.1 were each at 9-month lows.

South Korea’s PMI fell below the 50 no-change level to 49.4 from 51.1 in May. It was last below 50 in January.

Vietnam’s 46.4 was the lowest reading since July 2012, and Taiwan record a second straight sub-50 score with both orders and output contracting.

India’s 50.3 connotes near stagnation.

Germany’s reading of 48.6 was a tad below the preliminary score, the fourth sub-50 result in a row, and worse than the May reading of 49.4. Moreover, Germany’s recent floods did not appear to impact the June data much but will probably pack a bigger punch in the July number.

Indonesia’s PMI of 51.0 was at a 4-month low.

Within the euro area, the PMI readings in June represented a 4-month high in Austria, Ireland and the Netherlands, a 26-month peak in Spain, a 23-month high in Italy, a 16-month high in France, and a 24-month high in Greece.

Elsewhere in Europe,

Poland’s purchasing managers index of 49.3 was 1.3 points better than in May and 2.4 points above April’s 45-month low.

The Czech index of 51.0 was above 50 for a second straight time and at a 15-month high.

Canada is closed today for Canada Day. Lithuania began its 6-month stewardship in the EU presidency. Mark Carney officials started his stint as Bank of England governor today. There is a chance that Romania may cut interest rates today. U.S. data releases include the PMI manufacturing index and construction spending.

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